Use Your Tax Refund as a Mortgage Pre-Payment

April 23, 2012

Mortgage Monday

I know… it’s the last thing you really want to do with that “bonus money” you get back from the government… but hear me out.

Last year, the average Canadian tax refund was over $1,500. The temptation is to spend it – on a new LED TV, a new computer, a vacation – or even worse: to just whittle it away on random little purchases.

But if you plop that money down on your mortgage as a pre-payment, that $1,500 lump sum could save you thousands of dollars in interest over the life of your mortgage. So your mortgage is $1,500 closer to being paid off, plus you’ll save $2,000-$3,000 in interest – basically doubling or tripling the value of your pre-payment.

Look at it this way. It’s like buying a $1,500 LED TV, but paying $4,000 for it over the long run. Is that new TV you were thinking of buying with your tax refund worth 4 G’s?

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About Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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